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The Evolution of Trial Practice in the
United States Tax Court
THE HONORABLE L. PAIGE MARVEL*
I. Introduction
I foolishly agreed to write an article on the evolution of trial practice in the
United States Tax Court (hereinafter Tax Court or Court) on the occasion of
the Tax Section’s 75th anniversary before I considered what it should include.
So much has changed about the Court since I first started to practice before
it in 1974 that it is hard to identify the most significant changes, and even
then, my decision to write about some changes and not others is necessarily
subjective, depending as it is on my own experience as a tax controversy and
trial lawyer for 24 years and then as a Tax Court judge for over 16 years. But,
having made the commitment to write this Article, I have chosen to write
about developments affecting the Court’s jurisdiction, rules, processes, and
operating procedures that I think are particularly important to the evolution
of the Court.
II. The Evolution of the Court’s Caseload and Jurisdiction
The Tax Court in its present form as an Article I court of record has been
in existence since 1969. It is the only court within the federal government
devoted exclusively to tax matters, and it is the only court where a taxpayer
can challenge the determination of the Service without first having to pay the
disputed tax liability. This fact alone may explain why the Tax Court adjudicates more than 95% of the tax cases filed by taxpayers nationally and, for the
fiscal year 2013, had approximately 71% of the total dollars in dispute ($22
billion) in its inventory. Historically, the Tax Court has been and continues to
be the federal court devoted to the resolution of tax disputes between taxpayers and the federal government, and it offers taxpayers a convenient forum to
resolve issues regarding their tax liabilities. Many of the taxpayers who come
before the Court represent themselves. As of July 31, 2014, there were 27,245
cases pending in the Tax Court and 19,403 of those cases, or approximately
71%, were brought by taxpayers representing themselves. The Tax Court has
been and continues to be “The Peoples’ Court of Tax.”
During the 75 years that the Tax Section has been in existence, the Court’s
jurisdiction, which is defined by statute, has grown significantly. The Court’s
core deficiency jurisdiction over income tax, estate, gift, and generationskipping transfer taxes, certain excise taxes, and certain additions to tax,
*
Judge, United States Tax Court; College of Notre Dame of Maryland University, B.A.,
1971; University of Maryland School of Law, J.D., 1974.
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additional amounts, and penalties consistently generates the vast majority
of the Court’s pending caseload at any given time.1 But the Court also has
jurisdiction over other types of actions including, but not limited to, declaratory judgment actions involving tax-exempt organizations, retirement plans,
certain government obligations, gift tax valuations, installment agreement
eligibility for estates under section 6166,2 partnership actions,3 disclosure
actions relating to written determinations by the Service,4 claims for reasonable litigation and administrative costs,5 and transferee and fiduciary liability
actions.6 Congress has seen fit to give the Court new jurisdiction over the
years, which has generated significant additional work for the Court, and
these grants of new or expanded jurisdiction have resulted in many opinions
dealing with issues of first impression. Several of the most significant changes
merit some discussion here.
In 1982, the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)
added sections 6221-6231 to the Code.7 Those sections set forth detailed
rules governing the audit and litigation of partnerships, effective generally
for partnership tax years beginning after September 3, 1982. Before Congress
enacted TEFRA, there was no statutory mechanism permitting a unified
audit of a partnership or the consolidated litigation of partnership tax issues.
The lack of authority for a unified audit and litigation at the partnership level
meant that the Service was forced to identify and audit each partner in order
to challenge a partnership’s tax treatment of a partnership item, and if litigation became necessary, the Service had to issue a notice of deficiency to each
partner and each partner had to pursue a separate deficiency or refund action
in one of the federal courts authorized to hear tax disputes. During the heyday of the tax shelter era in the late 1970s and the early 1980s, the resulting
torrent of cases requiring repetitive litigation of partnership tax issues flooded
the courts and had a particularly egregious effect on the Tax Court’s caseload,
which, for example, ballooned in 1986 to over 83,000 pending cases.8
Starting in the 1980s, the Tax Court, one of the courts to which Congress
gave jurisdiction over TEFRA partnership cases,9 began the task of learning
and interpreting what proved to be one of the most challenging sets of procedural provisions in the Code. The TEFRA partnership audit and litigation
provisions introduced a new lexicon comprised of new terms and acronyms
1 See I.R.C. §§ 6211-6215. All section references are to the Internal Revenue Code of 1986,
as amended, unless stated otherwise.
2 See I.R.C. §§ 7476-7479.
3 See I.R.C. §§ 6226, 6228.
4 See I.R.C. § 6110(f ).
5 See I.R.C. § 7430.
6 See I.R.C. § 6901.
7 See Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. No. 97-248, § 402(a), 96
Stat. 324, 648.
8 Staff of J. Comm. on Taxation, 100th Cong., Summary of Revenue Provisions in
the President’s Fiscal Year 1989 Budget Proposal 11 (Comm. Print 1988).
9 See I.R.C. § 6226(a)(1).
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like tax matters partner (TMP), notice of final partnership administrative
adjustment (FPAA), administrative adjustment requests (AAR), partnership
items, affected items, and computational adjustments and required the entire
tax community, including the Tax Court, to learn complicated new procedures. The Court added a new title dealing with partnership tax litigation to
its Rules of Practice and Procedure to address some but not all of the procedural matters generated by the TEFRA partnership litigation provisions, and
it resolved other issues by opinion. The Tax Section created a task force, of
which Robert Wherry and I (before we became judges) were members, to help
the tax community make the transition to a new way of dealing with partnership tax disputes. The process of learning, implementing, and interpreting the
TEFRA partnership audit and litigation provisions continues today as evidenced by the recently issued opinion of the United States Supreme Court in
United States v. Woods10 and by a plethora of opinions from the Tax Court and
other federal courts in partnership litigation spanning more than a decade.11
Since the enactment of TEFRA in 1982, Congress has often expanded
the Court’s jurisdiction as part of new tax legislation. The Technical and
Miscellaneous Revenue Act of 1988 (TAMRA)12 expanded the Court’s jurisdiction by adding several provisions supplementing the Court’s deficiency
jurisdiction and giving the Court jurisdiction over appeals by taxpayers from
Service determinations denying awards under section 7430. TAMRA gave
the Court the authority to enforce overpayment determinations,13 redetermine interest on deficiencies,14 modify decisions in estate tax cases involving elections under section 6166,15 restrain assessment or collection,16 review
jeopardy assessments and jeopardy levies,17 and review proposed sales of
seized property.18 The Taxpayer Bill of Rights 2,19 enacted in 1996, gave the
Court jurisdiction to review the Commissioner’s failure to abate interest.20
The Taxpayer Relief Act of 199721 further expanded the Court’s jurisdiction
by giving the Court jurisdiction regarding the treatment of items other than
partnership items with respect to an over-sheltered return, the valuation of
certain gifts, the eligibility of estates regarding installment payments under
134 S. Ct. 557 (2013).
See, e.g., Tigers Eye Trading, LLC v. Commissioner, 138 T.C. 67 (2012); 106 Ltd. v.
Commissioner, 136 T.C. 67 (2011); Petaluma FX Partners, LLC v. Commissioner, 135 T.C.
581 (2010); Rhone-Poulenc Surfactants & Specialties, L.P. v. Commissioner, 114 T.C. 533
(2000).
12 Technical and Miscellaneous Revenue Act of 1988, Pub. L. No. 100-647, 102 Stat. 3342.
13 See I.R.C. § 6512(b)(2).
14 See I.R.C. § 7481(c).
15 See § 7481(d).
16 See I.R.C. § 6213(a).
17 See I.R.C. § 7429(b).
18 See I.R.C. § 6863(b)(3)(C).
19 Taxpayer Bill of Rights 2, Pub. L. No. 104-168, 110 Stat. 1452 (1996).
20 See I.R.C. § 6404(h).
21 Taxpayer Relief Act of 1997, Pub. L. No. 105-34, 111 Stat. 788.
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section 6166, actions for readjustment and adjustment of large partnership
items, and actions to redetermine employment status.
More recently, the Internal Revenue Service Restructuring and Reform Act
of 199822 significantly expanded the Court’s jurisdiction by giving the Court
jurisdiction over stand-alone petitions asserting a right to relief from joint
and several liability on a joint return under section 601523 and petitions to
review the Commissioner’s determination in lien and levy actions involving
taxes over which the Court had jurisdiction.24 And, in the Tax Relief and
Health Care Act of 2006,25 Congress amended section 7623 by adding new
subsection (b), which authorizes the Whistleblower Office of the Service to
determine amounts of awards to whistleblowers based on a percentage of
the tax collected. Section 7623(b)(4) gives the Tax Court jurisdiction over
appeals of award determinations, effective for determinations with respect to
information provided on or after December 20, 2006.
Each significant expansion of the Court’s jurisdiction has required the
Court and the tax community to learn the new statutory provisions and has
forced the Court to devise new rules and procedures with respect to the new
jurisdiction. More often than not, the Court has addressed the initial procedural questions by adding new titles to its Rules of Practice and Procedure.
Throughout the years, the Tax Section has maintained an active role in commenting upon proposed rules and communicating with the Court regarding
its new or expanded jurisdiction. The Court, as the primary tax litigation
forum for federal tax disputes, has also begun the task of interpreting and
applying the statutory provisions conferring its new or revised subject matter
jurisdiction and will continue that work into the foreseeable future.26
22 Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. No. 105-206,
§ 3201, 112 Stat. 685, 734.
23 See I.R.C. § 6015(e). Section 6015(e) was amended in 2000 and again in 2006 and now
confirms that the Court has jurisdiction in deficiency and stand-alone cases seeking relief
under section 6015. See Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432, § 408,
120 Stat. 2922, 3061-62; Community Renewal Tax Relief Act of 2000, Pub. L. No. 106-554,
§ 313, 114 Stat. 2763A-587, 2763A-640-41.
24 See I.R.C. §§ 6320(c), 6330(d). In the Pension Protection Act of 2006, Pub. L. No. 109280, § 855, 120 Stat. 780, 1019, Congress expanded the Court’s jurisdiction over lien and levy
cases under sections 6320 and 6330 by giving the Court exclusive jurisdiction over all such
actions, effective for determinations made after October 16, 2006.
25 Tax Relief and Health Care Act of 2006, Pub. L. No. 109-432, 120 Stat. 2922.
26 With respect to the Court’s whistleblower jurisdiction, see, for example, Whistleblower
11332-13W v. Commissioner, 142 T.C. No. 21, 3 (2014); SECC Corp. v. Commissioner, 142
T.C. No. 12, 2 (2014); Whistleblower 14106-10W v. Commissioner, 137 T.C. 183, 186-87
(2011). With respect to the Court’s lien and levy jurisdiction, see, for example, Wadleigh v.
Commissioner, 134 T.C. 280, 288-89 (2010); Murphy v. Commissioner, 125 T.C. 301, 308
(2005); Sego v. Commissioner, 114 T.C. 604, 609-10 (2000); Goza v. Commissioner, 114
T.C. 176, 182 (2000). With respect to the Court’s section 6015 jurisdiction, see, for example,
Porter v. Commissioner, 130 T.C. 115, 117 (2008); Charlton v. Commissioner, 114 T.C. 333,
334 (2000); Fernandez v. Commissioner, 114 T.C. 324, 328-39 (2000); Butler v. Commissioner, 114 T.C. 276, 287-90 (2000).
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III. Important Recent Changes Affecting Pretrial Practice
The Tax Court has periodically revised and restated its Rules of Practice and
Procedure to address its new and expanded jurisdiction and to deal with issues
affecting the timely and efficient disposition of pending matters. The Court,
recognizing the importance of providing a litigation experience that is sensitive to the large number of litigants who are self-represented, has also revised
its rules and procedures and implemented programs to improve the litigation
experience. Some of the most important recent changes include revision of
the Court’s rules regarding discovery and privacy, the implementation of an
electronic filing (e-filing) and electronic access (e-access) system, the development of new tools and materials to help self-represented litigants understand
the litigation process and what they must do to prepare for and try their cases,
and the expansion of the low-income taxpayer clinic (LITC) program. The
Court has also developed, maintained, and periodically enhanced a website
that is loaded with useful information and teaching tools for all litigants,
including those who are representing themselves.
A. Discovery
Before 1974, the Tax Court rules did not authorize formal discovery.
Effective January 1, 1974, the Court promulgated rules permitting limited
formal discovery but continued to emphasize the importance of informal
communication and consultation in preparing a case for trial. In contrast,
discovery practice in the federal district courts before 1993 permitted broad
pretrial discovery in the form of interrogatories, requests for production of
documents, and discovery depositions.
In 1993, the Federal Rules of Civil Procedure were amended to require
litigants to participate in a conference to plan discovery and make an initial
disclosure of relevant information and documents early in the litigation process and to limit the use of certain discovery tools such as interrogatories and
depositions. The 1993 amendments were designed to accelerate the exchange
of basic information about a case without the need for formal discovery,
encourage cooperation and consultation, reduce the costs of litigation, foster
more thoughtful and effective discovery, and minimize abuse and delay.
The Tax Court also reexamined its discovery rules. Guided in part by the
amendments to the Federal Rules of Civil Procedure, the Court has liberalized the availability of depositions, including nonconsensual depositions of
parties and third-party witnesses, and imposed a limit on the number of written interrogatories that a party may serve on any other party unless otherwise
agreed by the parties or ordered by the Court. The Court’s Rules of Practice
and Procedure continued to emphasize, however, that the Court expects the
parties to attempt to obtain the objectives of discovery through informal consultation or communication before utilizing formal discovery27 and requires
Tax Ct. R. Prac. & P. 70(a).
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the parties to stipulate, to the fullest extent possible, “all matters not privileged which are relevant to the pending case.”28
B. Privacy Protections, E-Filing, and E-Access
Before 2009, the Tax Court did not permit pleadings and other documents to be filed electronically, and access to its public case files could only
be obtained by visiting the Court in Washington, D.C. In 2002, Congress
enacted the E-Government Act,29 and the Court began to consider how
that legislation affected its operations. The E-Government Act requires federal courts to establish and maintain internet websites containing, among
other things, rules of the court, the substance of written opinions issued by
the court, and other information and to provide access to documents filed
with the court in electronic form. Although the E-Government Act did not
include the Tax Court in the listing of federal courts covered by the Act, the
Tax Court was already in compliance with most aspects of the E-Government
Act by virtue of the information available to the public on the Court’s website, which was launched in 1999 and enhanced over the years to provide
ever-greater electronic access to information about the Court, its operations,
and its work products. Nevertheless, the Court decided voluntarily to comply with the provisions of the Act and began to explore ways of expanding
electronic access.30
In the course of its consideration of the E-Government Act and a possible
e-filing program, the Court began to examine privacy concerns regarding personal information contained in the Court’s case files. Guided by amendments
to the Federal Rules of Bankruptcy Procedure in 2003, which implemented
the privacy policy of the Judicial Conference of the United States regarding
the protection of a person’s Social Security number, and by Rule 1005 of the
Federal Rules of Civil Procedure, the Court amended Rule 20, effective as of
March 1, 2008, to eliminate its long-standing requirement that a taxpayer
include in the petition the taxpayer’s identification number and to require
instead the submission of a separate statement of the taxpayer’s identification number with the petition. The statement is similar to the Statement of
Social Security Number used in the bankruptcy courts and to the civil cover
sheets used in other federal courts.31 It is not filed but is furnished to the
Service with a copy of the petition to enable the Service to obtain the correct
administrative file and prepare to file its answer to the petition.32 The Court
also issued a new rule, Rule 27, effective as of March 1, 2008, which provides for redaction of filings and other measures to protect specified sensitive
information and for procedures to deal with the failure to redact. Rule 27(b)
Tax Ct. R. Prac. & P. 91(a)(1).
E-Government Act of 2002, Pub. L. No. 107-347, § 205, 116 Stat. 2899, 2913-16.
30 Tax Ct. R. Prac. & P. 27, 130 T.C. 395-96.
31 Tax Ct. R. Prac. & P. 20(b), 130 T.C. 382-83.
32 Id.
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limits full remote access to the Court’s electronic files to the parties and their
counsel but does permit any other person to have limited remote electronic
access to the docket record and any opinion, order, or decision of the Court.
People who come to the courthouse may have electronic access to the entire
public record maintained by the Court.
The Court ultimately decided to develop and implement an electronic filing pilot program, effective on May 8, 2009, and issued an interim rule to
permit electronic filing in cases assigned to the pilot program. Under that
pilot program, registered petitioners and persons admitted to practice before
the Court could electronically file documents in cases first calendared for trial
or hearing after August 31, 2009.33
When the pilot program ended on January 1, 2010, the Court, effective as
of that date, adopted Rule 26, which provided that the Court will accept for
filing documents submitted, signed, or verified by electronic means that comply with the Court’s procedures, and the Court, effective July 1, 2010, made
electronic filing mandatory for most cases where the parties are represented
by counsel. As of June 17, 2011, the Court’s website has made available to the
public the Court’s orders in searchable format.
Although the transition was a long time coming, the Court has successfully
made the transition to an e-filing and e-access platform that is sensitive to
the importance of protecting the confidential information of taxpayers while
insuring that the parties and their representatives have electronic access to
their case files and that the public has electronic access to key documents such
as orders, opinions, and decisions. While the tax bar has been very supportive
of the Court’s e-filing and e-access program, some commentators have urged
the Court to expand the e-access program to permit broader electronic access
to electronic case files.34 Whether the Court will expand access is an issue that
the Court will have to address in the future, and the ABA Tax Section will
play a key role in any discussion about expanded access and its impact on
taxpayer privacy concerns.
C. Helping the Self-Represented Taxpayer
The Tax Court has long recognized its obligation to provide an opportunity for taxpayers representing themselves to litigate their tax disputes in a
fair, cost-efficient, and timely manner. Among other things, the Court has
issued rules of procedure35 for cases where the taxpayer has elected small tax
case treatment under sections 7436(c) and 7463. Those procedures confirm
that trials in small tax cases “will be conducted as informally as possible consistent with orderly procedure, and any evidence deemed by the Court to
Tax Ct. R. Prac. & P. 26, 135 T.C. 617.
William R. Davis, Limits to Tax Court Online Access Thwart Practitioners, 144 Tax Notes
(TA) 1124 (Sept. 8, 2014).
35 Tax Ct. R. Prac. & P. 170-74.
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have probative value shall be admissible.”36 It has developed a widely-praised
website that includes the Court’s rules, useful forms, an instructional video
designed to educate taxpayers regarding the Court with an emphasis on how
to prepare for trial and try their cases, and other educational materials. The
website permits taxpayers to search the Court’s opinion database, read about
the Court’s e-access program, and register for e-access if they choose to do so.
The website also contains information about LITCs that are available to assist
taxpayers with cases pending before the Court, including a complete list of
the clinics participating in the Court’s LITC program.
Currently, 108 clinics are participating in the Tax Court’s LITC program.
The clinics provide advice and representation to those taxpayers who meet
their eligibility requirements. Although the clinics are not part of the Court,
the Court supports the clinics’ efforts to assist taxpayers who might otherwise
represent themselves by including notices about the availability of local clinics
(stuffer notices) in mailings to taxpayers advising them that their cases have
been set for trial. It also supports programs sponsored by the ABA Tax Section
and other bar groups that place volunteer lawyers at the Court’s calendar calls
so that taxpayers with questions about their case, the Court’s procedures,
and other matters may obtain guidance from knowledgeable practitioners on
the day of the calendar call. These programs have enabled many taxpayers to
resolve their cases without trial and have helped to make what can be a scary
litigation process less formidable. Currently, there are 12 active calendar call
programs that serve 19 of the cities in which the Court holds trial sessions.
The Court also permits law students who are under the direct supervision
of counsel in a case, with the permission of the presiding judge, to assist
counsel by presenting all or any part of the party’s case at a hearing or trial.37
The student practice rule enables qualifying law students to obtain valuable
experience while assisting taxpayers in resolving their cases.
The Court’s support of the LITC program and its efforts generally to help
taxpayers representing themselves to understand and navigate the litigation
process are not the only developments worth mentioning. Any discussion
of the Court’s efforts to assist self-represented taxpayers would not be complete without recognizing the efforts of the judges (including senior judges
and special trial judges) who routinely travel to approximately 75 cities to
hear and decide cases for the Court. Beginning even before the calendar
call of each session, the judges will issue orders, many of which are carefully
drafted to explain pretrial procedure to the taxpayers, and will hold conference calls to clarify procedures and deal with pretrial issues that may come
up. Although each judge may differ in his or her approach to preparing for
a trial session, each judge is mindful of the Court’s commitment to provide
a fair trial to all litigants including self-represented taxpayers and conducts
his or her trial sessions with sensitivity. Given the large percentage of cases
Tax Ct. R. Prac. & P. 174(b).
Tax Ct. R. Prac. & P. 24(a)(5).
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involving self-represented taxpayers and the experience of the Court in managing that litigation, I doubt that there is any federal court that is more skilled
in handling pro se litigation. So, on the 75th anniversary of the Tax Section,
I urge the Tax Section to continue its support of LITCs and other programs
designed to help self-represented taxpayers, and I encourage Section members
to volunteer their services to assist the pro bono effort.
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